Stocks rose as the Federal Reserve's promise of continued easy-monetary policies helped offset the latest flare-up in Europe's debt crisis.
The Dow Jones Industrial Average gained 55.91 points, or 0.4%, to 14511.73, for its second straight day of gains. The blue-chip measure rose as much as 91 points in intraday trading, briefly moving above its intraday record from last Thursday.
The Standard & Poor's 500-stock index tacked on 10.37 points, or 0.7%, to 1558.71, while the Nasdaq (NDAQ)
The broad gains, which saw all but one of the 10 S&P 500 sectors finish in positive territory, came after the Fed said it would continue buying $85 billion in bonds each month to support the economic recovery. At a news conference, Fed Chairman Ben Bernanke said he didn't see the recent stock-market gains as out of line with historical patterns and underscored the central bank's commitment to monitoring developments in Cyprus.
In the Markets
"The biggest risk for the current bull market is a policy mistake by the Fed, or the European Central Bank, or the Bank of Japan, or the European Union, and we got a good sneak preview of that with Cyprus," said Burt White, chief investment officer at LPL Financial in Boston. "Fortunately, $85 billion a month is an enormous amount of stimulus, and that trumps virtually all other uncertainties, as bad as Cyprus is."
Leading the stock gains Wednesday were the two consumer sectors, consumer discretionary and consumer staples. Coca-Cola (KO)
Industrial and telecommunications stocks were the weakest performers. Caterpillar (CAT)
Also giving investors pause was FedEx (FDX),
The Dow Jones Transportation Average, an index of 20 railroad, shipping and airline stocks, pulled back 0.4%.
After the market's strong, steady rise to kick off the year, investors have been wrestling with a bout of volatility in recent days, thanks in part to concerns over a bailout of Cyprus's banking system.
"I don't think Cyprus is completely behind usâit will continue to raise its headâbut it was really more of an excuse for the market to take a little bit of profit," said Robert Pavlik, chief market strategist at Banyan Partners.
European markets gained ground. Cyprus Finance Minister Michalis Sarris, in Russia to discuss financial support, said talks were "very constructive" but that there was no agreement on potential loans.
The Stoxx Europe 600 edged up 0.3%, snapping a three-session losing streak. In London, the FTSE 100 gave up 0.1% for its fourth straight loss, after the U.K. said the number of unemployed in the three months ended in January rose, the first increase since the three months to January 2012.
In China, the Shanghai Composite Index climbed 2.7%, led by banks and developers, to a two-week high, ahead of Thursday's release of preliminary manufacturing data. The Japanese market was closed for a holiday.
Crude-oil prices rose 0.9%, to settle at $92.96 a barrel, but gold slipped 0.2%, to settle $1,607.50 a troy ounce. The dollar fell against the euro but rose versus the yen. Demand for Treasurys fell, pushing the yield on the 10-year note up to 1.936%.
In corporate news, Adobe Systems (ADBE)
Among new listings, Model N surged 4.48, or 29%, to 19.98, after the company, which makes revenue-management software for pharmaceutical and technology companies, sold more shares at a higher price than it had originally indicated.
Tetraphase Pharmaceuticals finished flat after the clinical-stage biopharmaceutical company priced its shares at $7, below its previously indicated range.
Write to Jonathan Cheng at email@example.com